Anxious West seeks to rewrite global trade rules to counter China

**The West’s push to rewrite global trade rules to counter China risks misdiagnosing the problem and undermining the very system it built.** At a recent Brussels summit, EU leaders called for expanding trade defence tools against “global macroeconomic imbalances,” widely seen as a reference to China’s industrial capacity. Measures under discussion include sector-wide tariffs on green tech and chemicals, instruments that echo the US Section 301 tariffs Europe once criticized. This marks a sharp turn from decades of championing open markets and multilateral rules.</p><p class="summary-lead">**The “overcapacity” narrative is a misnomer that obscures how China’s manufacturing strength was achieved.** China integrated into global supply chains, lowered tariffs, welcomed foreign investment, and strengthened intellectual property protections—exactly what its trading partners demanded. Its companies became competitive through scale, infrastructure, industrial clustering, and hard-won expertise, not merely subsidies. BYD, for example, produces 70% of its components in-house and thrives in one of the world’s most brutally competitive auto markets.</p><p class="summary-lead">**Yet the real anxieties of advanced economies—deindustrialisation, supply-chain vulnerabilities, and political dislocation—cannot be dismissed.** Germany, Japan, and South Korea depend on high-value exports like autos and machinery, and China’s efficiency does create pressure. But accusing Beijing of unfairness simply because its firms are innovative ignores that China still sells most of its cars domestically, while Germany exports 76.5% of its production. The problem is not Chinese success, but the failure of Western economies to adapt.</p><p class="summary-lead">**The solution lies in rebalancing, not retreating into protectionism.** China should continue shifting toward household consumption and a more flexible exchange rate, which would boost imports and global demand. Europe should welcome Chinese investment and partnerships in green industries, rather than excluding competitive producers. Both sides must resist the US path of unilateralism that weakened the WTO, and instead focus on WTO reform and negotiated dispute resolution.</p><p class="summary-lead">**The core insight is that industrial success is not the same as unfair trade.** Europe cannot demand a faster climate transition while blocking the world’s most efficient EV and solar producers. Just as Western firms contributed capital and knowledge to China’s rise, Chinese companies can now support Europe’s industrial renewal. The answer is not to rewrite rules in a panic, but to manage trade dislocations while preserving the benefits of open markets.</p><p class="summary-lead">**What to watch next:** Whether the EU moves toward sector-wide tariffs or instead pursues investment partnerships and WTO reform—and whether China accelerates domestic consumption and currency flexibility to ease global tensions.